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A. 1. a.(1)(a) i) a) I A 1 a (1)(a) i) a)@@BQck QuoteSingle spaced indented quote - Circv C   (  Cd  ( ( ( 2ZovQHR-U ZFTNFormats for each footnote,  X` hp x (#%'0*,.8135@8: commerce,' =   id., at 390 (quoting Illinois Natural Gas Co. v. Central  uB Ill. Public Service Co., 314 U.S. 498, 505 (1942)), to determine whether States have a sufficient interest in regulating wholesale rates within their borders, and had no problem concluding that States do indeed have such an interest, with the result that state regulation of wholesale rates is not precluded by the Commerce  uB Clause (in the absence of preemptive congressional action), id., at  uB? 394!395. While the holding of Arkansas Electric thereby expanded both the permissible scope of state utility regulation and judicial recognition of the important state interests in such regulation, the reasoning of the case equally implies that state regulation of retail sales is not, as a constitutional matter, immune from our ordinary Commerce Clause jurisprudence, and to the extent that our earlier cases may have implied such immunity they are no longer good law.  uB@ Nothing in Arkansas Electric undermines the earlier cases' recognition of the powerful state interest in regulating sales to domestic consumers buying at retail, however, which we reaffirm here. In  uBe addition, Arkansas Electric does not disturb the relevance of the wholesale/retail distinction for construing the jurisdictional provisions of statutes such as the NGA, which we discuss immediately  uB below. See id., at 380, and n.3; see also Schneidewind v. ANR  uBA Pipeline Co., 485 U.S. 293, 300!301 (1988) ( The NGA confers upon FERC exclusive jurisdiction over the transportation and sale of natural gas in interstate commerce for resale).G  When federal regulation of the natural gas industry finally began in 1938, Congress, too, clearly recognized the value of such stateregulated monopoly arrangements8 "   for the sale and distribution of natural gas directly to local consumers. Thus, 1(b) of the NGA, 15 U.S.C. 717(b), explicitly exempted local distribution of natural gas from federal regulation, even as the NGA authorized the Federal Power Commission (FPC) to begin regulating interstate pipelines. Congress's purpose in enacting the NGA was to fill the regulatory void created by the Court's earlier decisions prohibiting States from regulating interstate transportation and sales for resale of natural gas, while at the same time leaving undisturbed the recognized power of the States to regulate all  JH instate gas sales directly to consumers. Panhandle  J Eastern Pipe Line Co. v. Public Serv. Comm'n of Ind., 332 U.S. 507, 516!522 (1947). Thus, the NGA was drawn with meticulous regard for the continued exercise of state power, not to handicap or dilute it in any way,  J id., at 517!518; the scheme was one of cooperative action between federal and state agencies to protect consumers against exploitation at the hands of natural  J gas companies, id., at 520 (internal quotation marks omitted); and Congress' action ... was an unequivocal recognition of the vital interests of the states and their people, consumers and industry alike, in the regulation  Jh of rates and service, id., at 521; see also Panhandle  J@ Eastern Pipe Line Co. v. Michigan Pub. Serv. Comm'n, 341 U.S. 329, 334 (1951) ( Direct sales [of natural gas] for consumptive use were designedly left to state regulation by the NGA). Indeed, the Court has construed 1(b) of the NGA as altogether exempting state regulation of instate retail sales of natural gas from attack under the dormant Commerce Clause: BQ (C  , , (  The declaration [in the NGA], though not identical in terms with the one made by the McCarran Act, 59 Stat. 33, 15 U.S.C. 1011, concerning continued state regulation of the insurance business, is in effect equally clear, in view of the [NGA's] historical setting, legislative history and objects, to show "   intention for the states to continue with regulation where Congress has not expressly taken over. Cf.  J Prudential Ins. Co. v. Benjamin, 328 U.S. 408 [(1946) (upholding discriminatory state taxation of outofstate insurance companies as authorized by  J8 the McCarran Act)]. PanhandleIndiana, supra, at 521.BQ d   ( , , And Congress once again acknowledged the important role of the States in regulating intrastate transportation and distribution of natural gas in 1953 when, in the wake of a decision of this Court permitting the FPC to regulate intrastate gas transportation by LDCs, see  J Federal Power Comm'n v. East Ohio Gas Co., 338 U.S. 464 (1950), Congress amended the NGA to leav[e] jurisdiction over companies engaged in the distribution of natural gas exclusively in the States, as always has been intended. S. Rep. No. 817, 83d Cong., 1st Sess., 1!2 (1953); see 15 U.S.C. 717(c).  For 40 years, the complementary federal regulation of the interstate market and congressionally approved state regulation of the intrastate gas trade thus endured unchanged in any way relevant to this case. The resulting market structure virtually precluded competition between LDCs and other potential suppliers of natural gas for direct sales to consumers, including large industrial consumers. The simplicity of this dual system of federal and state regulation began to erode in 1978, however, when Congress first encouraged interstate pipelines to provide transportation services to end users wishing to  J ship gas,$ % uBD ԍ FTN    XgEpXFr  ddf < For a more complete description of these changes in federal regulatory policy, and the relevant modifications of Ohio regulation  uB of local utilities that they prompted, see supra at ___.$ and thereby moved toward providing a real choice to those consumers who were able to buy gas on the open market and were willing to take it free of  "   statecreated obligations to the buyer. The upshot of congressional and regulatory developments over the next 15 years was increasing opportunity for a consumer in that class to choose between gas sold by marketers and gas bundled with rights and benefits mandated by state regulators as sold by LDCs. But amidst such changes, two things remained the same throughout the period involved in this case. Congress did nothing to limit the States' traditional autonomy to authorize and regulate local gas franchises, and the local franchised utilities (though no longer guaranteed monopolies as to all natural gas demand) continued to provide bundled gas to the vast majority of consumers who had neither the capacity to buy on the interstate market nor the resilience to forgo the reliability and protection that state regulation provided.  To this day, all 50 States recognize the need to regulate utilities engaged in local distribution of natural  J0 gas.  0 uB ԍ FTN  &  XgEpXFr  ddf < Alabama: Ala. Code 37!4!1(7)(b) (Supp. 1996); see generally 37!1!80 through 37!1!105 (1992 and Supp. 1996); Alaska: Alaska Stat. Ann. 42.05.141, 42.05.291, 42.05.990(4)(D) (1989 and Supp. 1995); see generally 42.05.010!42.05.995; Arizona: Ariz. Rev. Stat. Ann. 40!201.4, 40!203 (1996); see generally 40!201 through 40!495; Arkansas: Ark. Code Ann. 23!1!101(4)(A)(i), 23!4!101 (1987 and Supp. 1995); see generally 23!1!101 through 23!4!637; California: Cal. Pub. Util. Code Ann. 216, 701 (West 1975 and Supp. 1996); see generally 201!2101; Colorado: Colo. Rev. Stat. 40!1!103(1)(a), 40!3!101 (1993); see generally 40!1!101 through 40!8.5!107 (1993 and Supp. 1996); Connecticut: Conn. Gen. Stat. Ann. 16!1(a)(4), (9), 16!6b (West 1988 and Supp. 1996); see generally 16!1 through 16!50f; Delaware: Del Code Ann., Tit. 26, 102(2) (Supp. 1996); see generally, Tit. 26, 101 through 511 (1989 and Supp. 1996); District of Columbia: D.C. Code Ann. 43! 203, 43!212 (1990); see generally 43!101 through 43!1107 (1990  uB and Supp. 1996); Florida : Fla. Stat. Ann. 366.02(1), 366.03 (West Supp. 1997); see generally 366.01 through 366.14 (West 1968 and Supp. 1997); Georgia: Ga. Code Ann. 46!2!20(a) (1992); see generv "##Ԯally 46!2!20 through 46!2!94 (1992 and Supp. 1996); Hawaii: Haw. Rev. Stat. Ann. 269!1, 269!6, 269!16 (Michie 1992 and Supp. 1996); see generally 269!1 through 269!32; Idaho: Idaho Code 61!129, 61!501, 61!502 (1994); see generally 61!101 through 61!714; Illinois: Ill. Comp. Stat. ch. 220, 5/3!105, 5/4!101, 5/9!101 (1994); see generally ch. 220, 5/1!101 through 5/10!204; Indiana: Ind. Code. 8!1!2!1, 8!1!2!4, 8!1!2!87 (West Supp. 1996); see generally 8!1!2!1 through 8!1!2!127; Iowa: Iowa Code Ann. 476.1 (West Supp. 1996); see generally 476.1 through 476.66 (West 1991 and Supp. 1996); Kansas: Kan. Stat. Ann. 66!104, 66!1,200 through 66!1,208 (1985 and Supp. 1995); Kentucky: Ky. Rev. Stat. Ann. 278.010(3)(c) (Baldwin 1992); see generally 278.010 through 278.450; Louisiana: La. Rev. Stat. Ann. 33:4161 (West 1988); see generally 33:4161 through 33:4174, 33:4301 through 33:4308, 33:4491 through 33:4496 (West 1988 and Supp. 1996); Maine: Me. Rev. Stat. Ann. Tit. 35!A, 102, 103, 301 (1988 and Supp. 1996!1997); see generally Tit. 35!A, 101!1210; Maryland: Md. Ann. Code, Art. 78, 1, 2(o) (1991); see generally Art. 78, 1 through 2, 23 through 27A, 51 through 54K, 68 through 88 (1991 and Supp. 1994); Massachusetts: Mass. Gen. Laws 164:1, 164:93, 164:94 (1994); see generally ch. 164, 1 through 128; Michigan: Mich. Comp. Laws Ann. 460.6!460.6b (West 1991 and Supp. 1996!1997); see generally 460.1 through 460.8; Minnesota: Minn. Stat. Ann. 216B.02(4), 216B.03 (West 1992); see generally 216B.01 through 216B.67 (1994 and Supp. 1995); Mississippi: Miss. Code Ann. 77!3!3(d)(ii), 77!3!5 (1991 and Supp. 1996); see generally 77!3!1 through 77!3!307; Missouri: Mo. Rev. Stat. 386.020, 393.130 (1994); see generally 386.010 through 386.710, 393.010 through 393.770; Montana: Mont. Code Ann. 69!3!101, 69!3!102, 69!3!201 (1995); see generally 69!3!101 through 69!3!713; Nebraska: Neb. Rev. Stat. 14!1103 through 14!1103.1, 19!4601 through 19!4623 (1991); Nevada: Nev. Rev. Stat. Ann. 704.020(2)(a) (1995); see generally 704.001 through 704.320, 704.755; New Hampshire: N. H. Rev. Stat. Ann. 362:2, 374:1, 374:2 (1995); see generally 378:1 through 378:42; New Jersey: N.J. Stat. Ann. 48:2!13 (West Supp. 1996); see generally 48:2!13 through 48:2!91, 48:9!5 through 48:9!32 (West 1969 and Supp. 1996!1997); New Mexico: N.M. Stat. Ann. 62!3!3, 62!6!4, 62!8!1 (1993 and Supp. 1996); see generally 62!1!1 through 62!13!14; New York: N.Y. Pub. Serv. Law 65 (McKinney 1989); see generally 30 through 52, 64 through 77 (McKinney 1989 and Supp. 1996); North Carolina: N.C. Gen. Stat. 62!3(23), 62!30 (1989 and Supp. "## 1996); see generally 62!1 through 62!171; North Dakota: N.D. Cent. Code 49!02!01, 49!02!02, 49!04!02 (1978 and Supp. 1995); see generally 49!02!01 through 49!07!06; Ohio: Ohio Rev. Code Ann. 4905.03(A)(6), 4905.04, 4905.22 (1991); see generally 4901.01!4909.99 (Baldwin 1991 and Supp. 1995); Oklahoma: Okla. Stat., Tit. 17, 15, 152, 160.1 (West 1986 and Supp. 1997); Oregon: Ore. Rev. Stat. 757.005, 757.020, 756.040 (1991); see generally 756.010 through 757.991; Pennsylvania: Pa. Cons. Stat. Tit. 66, 102, 501, 1301 (Purdon 1979 and Supp. 1996!1997); see generally Tit. 66, 101 through 2107; Rhode Island: R.I. Gen. Laws 39!1! 2(7), 39!1!3(a) (Supp. 1996); see generally 39!1!1 through 39!2!19 (1990 and Supp. 1996); South Carolina: S.C. Code Ann. 58!5!10(3), 58!5!210 (1976 and Supp. 1995); see generally 58!5!10 through 58!5!1070; South Dakota: S.D. Codified Laws 49!34A!1, 49!34A!4, 49!34A!6 (1993 and Supp. 1996); see generally 49!34A!1 through 49!34A!78; Tennessee: Tenn. Code Ann. 65!4!101, 65!5!201 (Supp. 1996); see generally 65!4!101 through 65!5!205 (1993 and Supp. 1996); Texas: Tex. Rev. Civ. Stat. Ann. Art 6050, 1(a)(4), Art. 6053 (Vernon Supp. 1996!1997); see generally Arts. 6050 through 6066g (Vernon 1962 and Supp. 1996!1997); Utah: Utah Code Ann. 54!2!1(8), 54!3!1, 54!4!1 (1994 and Supp. 1996); see generally 54!2!1 through 54!4!30; Vermont: Vt. Stat. Ann., Tit. 30, 215 (1986); Virginia: Va. Code Ann. 56!232, 56!234 (1995); see generally 56!232 through 56!260.1 (1995 and Supp. 1996); Washington: Wash. Rev. Code 80.04.010, 80.28.020 (West 1991 and Supp. 1996!1997); see generally 80.04.010 through 80.04.520, 80.28.010 through 80.28.260; West Virginia: W. Va. Code 24!2!1 (1992); see generally 24!1!1 through 24!5!1 (1992 and Supp. 1996); Wisconsin: Wis. Stat. Ann. 196.01(5), 196.02, 196.03 (West 1992 and Supp. 1996!1997); see generally 196.01 through 196.98; Wyoming: Wyo. Stat. 37! 1!101(a)(vi)(D), 37!2!112 (1996); see generally 37!1!101 through 37!6!107. Ohio's treatment of its gas utilities has been a0p "   typical blend of limitation and affirmative obligation. Its natural gas utilities, during the period in question, bore with a variety of requirements: they had to submit annual forecasts of future supply and demand for gas, Ohio Rev. Code Ann. 4905.14 (Supp. 1990), comply with a range of accounting, reporting, and disclosure rules, 4905.14, 4905.15 (1977 and Supp. 1990), and get permission from the State Public Utilities Commissionp "   to issue securities and even enter certain contracts, 4905.40, 4905.41, 4905.48. The just and reasonable rates to which they were restricted, see 4905.22, 4905.32, 4909.15, 4909.17, included a single average cost of gas, see Ohio Admin. Code 4901:1!14 Ohio Monthly Record (Nov. 1991), together with a limited return on  J investment.R  uBx ԍ FTN  &  XgEpXFr  ddf < Ohio's Amended Substitute House Bill 476, signed into law in 1996, requires the state Public Utilities Commission to exempt certain sales of natural gas and/or related services by an LDC from this rate regulation if the Commission finds that the LDC is subject to effective competition with respect to such service and that the customers for such service have reasonably available alternatives, Ohio Rev. Code Ann. 4929.04, as amended by H.R. 476, 1, effective Sept. 17, 1996. Although this law had not been enacted at the time of the purchases involved in this case, petitioner contended at oral argument that during the tax period in question here, Ohio permitted some natural gas sales by public utilities at unregulated, negotiated rates, and that those sales were not subject to sales tax. The record provides no support for this contention, and the constitutionality of Ohio exempting from state sales tax utility sales that are not priceregulated is therefore not before the Court in this case.R The LDCs could not exact a greater or lesser compensation for any services rendered ... than [exacted] ... from any other [customer] for doing a like and contemporaneous service under substantially the same circumstances and conditions. Ohio Rev. Code Ann. 4905.33 (Supp. 1990).  The State also required LDCs to serve all members of the public, without discrimination, throughout their  J fields of operations. See, e.g., Industrial Gas Co. v.  J Public Utilities Comm'n of Ohio, 135 Ohio St. 408, 21 N.E.2d 166 (1939). They could not pick out good portions of a particular territory, serve only select customers under private contract, and refuse service ...  J to ... other users, id., at 413, 21 N.E.2d, at 168, or terminate service except for reasons defined by statute and by following statutory procedures, Ohio Rev. CodeI "   Ann. 4933.12, 4933.121 (Supp. 1990). When serving  J  human needs consumers including residential [and] other customers ... where the element of human  J welfare [was] the predominant factor, In re Commission Ordered Investigation of the Availability of Gas Transportation Service Provided by Ohio Gas Distribution  J Utilities to EndUse Customers, No. 85!800!GACOI (Ohio Pub. Util. Comm'n, Aug. 1, 1989), Ohio LDCs were required to provide a firm backup supply of gas, see  J ibid., and administer specific protective schemes, as by helping to assure a degree of continued service to low JH income customers despite unpaid bills. See, e.g., Ohio Admin. Code 4901:1!18 (Ohio Monthly Record Nov. 1991).  9H1 d d7IV؃  2  The fact that the local utilities continue to provide a product consisting of gas bundled with the services and protections summarized above, a product thus different from the marketer's unbundled gas, raises a hurdle for GMC's claim that Ohio's differential tax treatment of natural gas utilities and independent marketers violates  JN our   ! `virtually per se rule of invalidity,' !  Associated  J& Industries of Mo. v. Lohman, 511 U.S. 641, 647 (1994)  J (quoting Armco Inc. v. Hardesty, 467 U.S. 638, 642 (1984)), prohibiting facial discrimination against interstate commerce.  ;H2 d d8A؃  J  2  Conceptually, of course, any notion of discriminationo O uB\ ԍ FTN  &  XgEpXFr  ddf < Although GMC raises only a facial discrimination challenge to Ohio's tax scheme, our cases have indicated that even nondiscriminatory state legislation may be invalid under the dormant Commerce  uB Clause, when, in the words of the socalled Pike undue burden test, the burden imposed on [interstate] commerce is clearly excessive in  uB relation to the putative local benefits, Pike v. Bruce Church, Inc., 397 U.S. 137, 142 (1970). There is, however, no clear line between "##  uB these two strands of analysis, Brown-Forman Distillers Corp. v. New  uBG York State Liquor Authority, 476 U.S. 573, 579 (1986), and several cases that have purported to apply the undue burden test (including  uB Pike itself) arguably turned in whole or in part on the discrimina uBl tory character of the challenged state regulations, see, e.g., Pike,  uB# supra, at 145 (declaring packing order virtually per se illegal because it required business operation to be performed instate);  uB Kassel v. Consolidated Freightways Corp. of Del., 450 U.S. 662, 677 (1981) (plurality opinion of Powell, J.) (noting that in adopting invalidated trucklength regulation the State seems to have hoped to limit the use of its highways by deflecting some through traffic);  uBm id., at 679!687 (Brennan, J., concurring in judgment) (emphasizing that trucklength regulation should be invalidated solely in view of its protectionist purpose); see generally, Regan, The Supreme Court and State Protectionism: Making Sense of the Dormant Commerce Clause, 84 Mich. L. Rev. 1091 (1986). Nonetheless, a small number of our cases have invalidated state laws under the dormant Commerce Clause that appear to have been genuinely nondiscriminatory, in the sense that they did not impose disparate treatment on similarly situated instate and outofstate interests, where such laws undermined a compelling need for national uniformity in regulation.  uB See Bibb v. Navajo Freight Lines, Inc., 359 U.S. 520 (1959) (conflict  uBJ in state laws governing truck mud flaps); Southern Pacific Co. v.  uB Arizona ex rel. Sullivan, 325 U.S. 761 (1945) (train lengths); see  uB also CTS Corp. v. Dynamics Corp. of America, 481 U.S. 69, 88 (1987) ( This Court's recent Commerce Clause cases also have invalidated statutes that may adversely affect interstate commerce by subjecting activities to inconsistent regulations); L. Brilmayer, Conflict of Laws 3.2.3, pp. 144!148 (2d ed. 1995) (discussing Court's review of conflicting state laws under the dormant Commerce Clause). In the realm of taxation, the requirement of apportionment plays a similar role by assuring that interstate activities are not unjustly burdened by multistate taxation. See generally  uB' Oklahoma Tax Comm'n v. Jefferson Lines, Inc., 514 U.S. ___, ___ (1995) (slip op., at 9!10) (discussing internal and external consistency tests for apportionment of state taxes). Of course, the fact that Ohio exempts local utilities from its sales and use taxes could not support any claim of undue burden in this nondiscriminatory sense, since the exemption itself does not give rise to conflicting regulation of any transaction or result in malapportionment of any tax.o  "   assumes a comparison of substantially similar entities. Although this central assumption has more often than not itself remained dormant in this Court's opinions on state discrimination subject to review under the dormant Commerce Clause, when the allegedly competing entities provide different products, as here, there is a threshold question whether the companies are indeed similarly situated for constitutional purposes. This is so for the simple reason that the difference in products may mean that the different entities serve different markets, and would continue to do so even if the supposedly discriminatory burden were removed. If in fact that should be the case, eliminating the tax or other regulatory differential would not serve the dormant Commerce Clause's fundamental objective of preserving a national market for competition undisturbed by preferential advantages conferred by a State upon its residents or resident competitors. In Justice Jackson's nowfamous words: BQ 0C  , , ( N N " Our system, fostered by the Commerce Clause, is that every farmer and every craftsman shall be encouraged to produce by the certainty that he will have free access to every market in the Nation, that no home embargoes will withhold his exports, and no foreign state will by customs duties or regulations exclude them. Likewise, every consumer may look to the free competition from every producing area in the Nation to protect him from exploitation by any. Such was the vision of the Founders; such has been the doctrine of this Court which has given  J it reality. H. P. Hood & Sons, Inc. v. Du Mond, 336 U.S. 525, 539 (1949).  Jk vBQ kd  ( , , See also, e.g., Wyoming v. Oklahoma, 502 U.S. 437, 469  J (1992) (Scalia, J. dissenting) ( Our negative Commerce Clause jurisprudence grew out of the notion that the Constitution implicitly established a national free market  J/ ...); Reeves, Inc. v. Stake, 447 U.S., at 437 (The/ "   dormant Commerce Clause prevents state taxes and regulatory measures impeding free private trade in the  J national marketplace); Hunt v. Washington State Apple  J Advertising Comm'n, 432 U.S. 333, 350 (1977) (referring to the Commerce Clause's overriding requirement of a national `common market' 2! ). Thus, in the absence of actual or prospective competition between the supposedly favored and disfavored entities in a single market there can be no local preference, whether by express discrimination against interstate commerce or undue burden upon it, to which the dormant Commerce Clause may apply. The dormant Commerce Clause protects markets and participants in markets, not taxpayers as such.  J  Our cases have, however, rarely discussed the comparability of taxed or regulated entities as operators in arguably distinct markets; the closest approach to the  J facts here occurred in Alaska v. Arctic Maid, 366 U.S.  JX 199 (1961). In Arctic Maid, a 4% tax on the value of salmon taken from territorial waters by socalled freezer ships and frozen for transport and later canning outside the State was challenged as discriminatory in the face of a 1% tax on the value of fish taken from territorial waters and frozen by onshore cold storage facilities for later sale on the domestic freshfrozen fish market. The State prevailed on the Court's holding that the claimants and cold storage facilities served separate markets, did not compete with one another, and thus could not properly be compared for Commerce Clause purposes. The proper comparison, the Court held, was between the freezer ships and domestic salmon canners, who shipped interstate into the same markets served by the freezer ships. Since the canners were taxed even more heavily than the freezer ships, there was no unfavorable burden  J upon the latter. Id., at 204. Although the Court's opinion did not discuss the possibility that competition in the domestic freshfrozen market might have occurred in the absence of the tax disparity between the two` "   types of salmon freezers, the freezer ships had made no attempt to compete in that market and neither claimed nor demonstrated an interest in entering it. See Brief  J for Respondents in Alaska v. Arctic Maid, O.T. 1960, No. 106, pp. 27!33.  J8  Arctic Maid provides a partial analogy to this case. Here, natural gas marketers did not serve the Ohio LDCs' core market of small, captive users, typified by residential consumers who want and need the bundled  J product. See, e.g., Darr, A State Regulatory Strategy for the Transitional Phase of Gas Regulation, 12 Yale J. on Reg. 69, 99 (1995) ( [T]he large core residential customer base is bound to the LDC in what currently appears to be a naturalmonopoly relationship); App. 199 (a marketer from which GMC purchased gas does not hold itself out to the general public as a gas supplier, but rather selectively contacts industrial end users that it has identified as potentially profitable customers). While this captive market is not geographically distinguished from the area served by the independent marketers, it is defined economically as comprising consumers who are captive to the need for bundled benefits. These are buyers who live on sufficiently tight budgets to make the stability of rate important, and who cannot readily bear the risk of losing a fuel supply in  J harsh natural or economic weather. See, e.g., Consoli J dated Edison Co. of N. Y. v. FERC, 676 F.2d 763, 766, n. 5 (CADC 1982) ( [R]esidential users [of natural gas cannot] switch temporarily to other fuels and so they must endure cold homes if their gas supply is interrupted); A. Samuels, Reliability of Natural Gas Service for Captive EndUsers Under the Federal Energy Regulatory Commission's Order No. 636, 62 Geo. Wash. L. Rev. 718, 749 (1994) ( Gas service disruptions lasting just a few days can cause severe health risks to captive endusers). They are also buyers without the high volume requirements needed to make investment in the` "   transaction costs of individual purchases on the open market economically feasible. Pierce, Intrastate Natural Gas Regulation: An Alternative Perspective, 9 Yale J. on Reg. 407, 409!410 (1992) ( Purchasing gas service [from marketers] requires considerable time and expertise. Its benefits are likely to exceed its costs only for consumers who purchase very large quantities of gas). The demands of this market historically arose free of any influence of differential taxation (since there was none during the pre1978 period when only LDCs generally served endusers), and because the market's economic characteristics appear to be independent of any effect attributable to the State's sales taxation as imposed today, there is good reason to assume that any pricing changes that could result from eliminating the sales tax differential challenged here would be inadequate to create competition between LDCs and marketers for the business of the utilities' core home market.  On the other hand, one circumstance of this case is  J unlike what Arctic Maid assumed, for there is a possibility of competition between LDCs and marketers for the noncaptive market. Although the record before this Court reveals virtually nothing about the details of that competitive market, in the period under examination it presumably included bulk buyers like GMC, which have  J no need for bundled protection, see, e.g., State Issue: Atlanta Gas Light Takes Step to Abandon Gas Sales by Unbundling Services for NonCore Customers, Foster Natural Gas Report, June 20, 1996, p. 22 (indicating that prior to unbundling marketers accounted for 80% of sales to large commercial and industrial users in Georgia), and consumers of middling volumes of natural gas who found some value in Ohio's stateimposed protections but not enough to offset lower price at some  J point, see, e.g., Pierobon, Small Customers: The Yellow Brick Road to Deregulation?, 134 Pub. Utils. Fortnightly, No. 6, pp. 14, 15 (1996) (marketers' efforts in California` "   are increasingly directed to attracting consumers in the small commercial sector, including schools, hospitals, hotels, restaurants, laundromats, and mastermetered apartments, which currently purchase bundled gas from utilities); Salpukas, New Choices for Natural Gas: Retailers Find Users Puzzled as Industry Deregulates, N.Y. Times, Oct. 23, 1996, pp. D1, D4 (indicating thatsome natural gas marketers in New York City are attempting to lure momandpop businesses like restaurants and drycleaners away from LDCs, with mixed success). Eliminating the sales tax differential at issue here might well intensify competition between LDCs and marketers for customers in this noncaptive market.  ;H2 d d8B؃  4 2  In sum, the LDCs' bundled product reflects the demand of a market neither susceptible to competition by the interstate sellers nor likely to be served except by the regulated natural monopolies that have historically supplied its needs. So far as this market is concerned, competition would not be served by eliminating any tax differential as between sellers, and the dormant Commerce Clause has no job to do. There is, however, a further market where the respective sellers of the bundled and unbundled products apparently do compete and may compete further. Thus, the question raised by this case is whether the opportunities for competition between marketers and LDCs in the noncaptive market requires treating marketers and utilities as alike for dormant Commerce Clause purposes. Should we accord controlling significance to the noncaptive market in which they compete, or to the noncompetitive, captive market in which the local utilities alone operate?  J Although there is no a priori answer, a number of reasons support a decision to give the greater weight to the captive market and the local utilities' singular role in serving it, and hence to treat marketers and LDCs as "   dissimilar for present purposes. First and most important, we must recognize an obligation to proceed cautiously lest we imperil the delivery by regulated LDCs of bundled gas to the noncompetitive captive market. Second, as a court we lack the expertness and the institutional resources necessary to predict the effects of judicial intervention invalidating Ohio's tax scheme on the utilities' capacity to serve this captive market. Finally, should intervention by the National Government be necessary, Congress has both the resources and the power to strike the balance between the needs of the competitive and captive markets.  =H3 d d81؃  \ 2  2  Where a choice is possible, as it is here, the importance of traditional regulated service to the captive market makes a powerful case against any judicial treatment that might jeopardize LDCs' continuing capacity to serve the captive market. Largely as a response to the monopolistic shakeout that brought an end to the era of unbridled competition among gas utilities, regulation of natural gas for the principal benefit of householders and other consumers of relatively small quantities is the rule in every State in the Union.  J0  Congress has also long recognized the desirability of  J these state regulatory regimes. Supra, at ___. Indeed, half a century ago we concluded that the NGA altogether exempts state regulation of retail sales of natural gas (including instate sales to large industrial customers) from the strictures of the dormant Commerce  J@ Clause, see Panhandle Eastern Pipe Line Co. v. Public  J Serv. Comm'n of Ind., 332 U.S. 507 (1947), and to this day, notwithstanding the national regulatory revolution, Congress has done nothing to limit its unbroken recognition of the state regulatory authority that has created "    J and preserved the local monopolies. o uBh ԍ FTN  &  XgEpXFr  ddf < In the present case, the parties have not briefed the question whether the present amended version of the NGA and related federal legislation continues the express Commerce Clause exemption for state regulation and taxation of retail natural gas sales recog uBD nized in PanhandleIndiana, and we do not decide this issue. Wenote, however, that the language of 1(b) of the NGA, which  uB thePanhandleIndiana Court construed as creating the exemption, itself remains unchanged. (Compare 52 Stat. 821 with 15 U.S.C. 717(b) (1994).) The clear implication is that Congress finds the benefits of the bundled product for captive local buyers well within the realm of what the States may reasonably promote and preserve.  This Court has also recognized the importance of avoiding any jeopardy to service of the stateregulated captive market, and in circumstances remarkably similar  J to those of the present case. In Panhandle Eastern Pipe  J Line Co. v. Michigan Pub. Serv. Comm'n, 341 U.S. 329 (1951), Ford Motor Company had entered a contract with an interstate pipeline for supply of gas at Ford's plant in Dearborn, Michigan, thus bypassing the local distribution company. The Michigan Public Service Commission ordered the pipeline to cease and desist from making direct sales of natural gas to the State's industrial customers without a certificate of public convenience and necessity, and the pipeline brought a Commerce Clause challenge to the Commission's action. The Court observed that BQ C  , , (  [a]ppellant asserts a right to compete for the cream of the volume business without regard to the local public convenience or necessity. Were appellant successful in this venture, it would no doubt be reflected adversely in [the LDC's] overall costs of service and its rates to customers whose only source of supply is [the LDC]. This clearly presents a situation of ... vital interest to the State of Michi3 "  Ԯ J gan. Id., at 334. BQ d   ( , , In view of the economic threat that competition for large industrial consumers posed to gas service to small captive users, the Court again reaffirmed its longstanding doctrine upholding the States' power to regulate all direct instate sales to consumers, even if such regulation resulted in an outright prohibition of competi JL tion for even the largest end users. Id., at 336!337; see  J$ also Panhandle!Indiana, supra (upholding state regulation of direct sales to large industrial users as not preempted by the NGA or precluded by the dormant  J Commerce Clause).K  uB ԍ FTN  &  XgEpXFr  ddf < Under today's altered market structure, see supra, at ___, several courts of appeals have held that the NGA confers jurisdiction on FERC, rather than the States, to regulate such bypass arrangements for supplying gas to large industrial consumers when the sale of gas itself occurs outside the State and an interstate pipeline merely transports the gas to the industrial consumer for  uB^ delivery instate. See Cascade Natural Gas Corp. v. FERC, 955  uB F.2d 1412, 1414!1422 (CA10 1992); Michigan Consolidated Gas Co.  uB v. Panhandle Eastern Pipe Line Co., 887 F.2d 1295, 1299!1301  uB (CA6 1989), cert. denied, 494 U.S. 1079 (1990); Michigan Consoli uB: dated Gas Co. v. FERC, 883 F.2d 117, 121!122 (CADC 1989), cert. denied, 494 U.S. 1079 (1990). We express no view on the correctness of these decisions.  The continuing importance of the States' interest in protecting the captive market from the effects of competition for the largest consumers is underscored by the common sense of our traditional recognition of the need to accommodate state health and safety regulation in applying dormant Commerce Clause principles. State regulation of natural gas sales to consumers serves important interests in health and safety in fairly obvious ways, in that requirements of dependable supply and extended credit assure that individual buyers of gas for domestic purposes are not frozen out of their houses in the cold months. We have consistently recognized the "   legitimate state pursuit of such interests as compatible with the Commerce Clause, which was  l! `never intended to cut the States off from legislating on all subjects relating to the health, life, and safety of their citizens, though the legislation might indirectly affect the com J8 merce of the country.' !  Huron Portland Cement Co. v.  J Detroit, 362 U.S. 440, 443!444 (1960) (quoting Sherlock  J v. Alling, 93 U.S. 99, 103 (1876)). Just so may health  J and safety considerations be weighed in the process of deciding the threshold question whether the conditions entailing application of the dormant Commerce Clause  JH are present.UH  uB ԍ FTN  &  XgEpXFr  ddf < Of course, if a State discriminates against outofstate interests by drawing geographical distinctions between entities that are otherwise similarly situated, such facial discrimination will be subject to a high level of judicial scrutiny even if it is directed  uB toward a legitimate health and safety goal. See, e.g., Philadelphia  uBC v. New Jersey, 437 U.S. 617, 626!628 (1978); Dean Milk Co. v.  uB Madison, 340 U.S. 349, 353!354 (1951).U d =H3 dd d82؃  \ 2  2  The size of the captive market, its noncompetitive character, the values served by its traditional regulation: all counsel caution before making a choice that could strain the capacity of the States to continue to demand the regulatory benefits that have served the home market of lowvolume users since natural gas became readily available. Here we have to assume that any decision to treat the LDCs as similar to the interstate marketers would change the LDCs' position in the noncaptive market in which (we are assuming) they compete, at least at the margins, by affecting the overall size of the LDCs' customer base. As we recognized in  J Panhandle, a change in the customer base could affect the LDCs' ability to continue to serve the captive market where there is no such competition."  Ԍ To be sure, what in fact would happen as a result of treating the marketers and LDCs alike we do not know. We might assume that eliminating the tax on marketers' sales would leave those sellers stronger competitors in the noncaptive market, especially at the market's boundaries, and that any resulting contraction of the LDCs' total customer base would increase the unit cost of the bundled product. We might also suppose that the State would not respond to our decision by subjecting the LDCs and marketers both to the same sales tax now imposed on marketers alone, since the utilities are already subject to a complicated scheme of property taxation quite different from the tax treatment of the  J marketers.K  uB` ԍ FTN  &  XgEpXFr  ddf < For example, public utilities pay personal property tax on 88%of true value, Ohio Rev. Code Ann. 5727.111 (1996), while marketers pay personal property tax on 25% of their true value, 5711.22(D). Public utilities also pay a special tax assessment for the expenses ofthe Public Utility Commission, 4905.10 (1991), and for the expenses of the Ohio Consumer Counsel, 4911.18. Moreover,  uB natural gas utilities must pay a  gross receipts tax of 4.75% on gas sales, 5727.38 (1996), while marketers pay none. Independent marketers, for their part, are subject to a franchise tax, 5733.01, that does not apply to utilities, 5733.09(a). Thus, this sales and use tax challenge would not be the last available to marketers and their customers; the franchise tax, which also does not apply to utilities, is presumably next in line. It seems, in fact, far more likely that eliminating the tax challenged here would portend, among other things, some reduction of the total taxes levied against LDCs, in order to strengthen their position in trying to compete with marketers in the noncaptive market.  The degree to which these very general suggestions might prove right or wrong, however, is not really significant; the point is simply that all of them are nothing more than suggestions, pointedly couched in terms of assumption or supposition. This is necessarilyh "   so, simply because the Court is institutionally unsuited to gather the facts upon which economic predictions can be made, and professionally untrained to make them.  J See, e.g., Fulton Corp. v. Faulkner, 516 U.S. ___, ___ (1996) (slip op., at 16!17), and authorities cited therein; Hunter, Federalism and State Taxation of Multistate Enterprises, 32 Emory L. J. 89, 108 (1983) ( It is virtually impossible for a court, with its limited resources, to determine with any degree of accuracy the costs to a town, county, or state of a particular industry); see also Smith, State Discriminations Against Interstate Commerce, 74 Cal. L. Rev. 1203, 1211 (1986) (noting that [e]ven expert economists may have difficulty determining whether the overall economic benefits and burdens of a regulation favor local inhabitants against outsiders). We are consequently illqualified to develop Commerce Clause doctrine dependent on any such predictive judgments, and it behooves us to be as reticent about projecting the effect of applying the Commerce Clause here, as we customarily are in declining to engage in elaborate analysis of realworld  J economic effects, Fulton Corp., supra, at ___ (slip op., at 16!17), or to consider subtle compensatory tax defenses,  Jh Oregon Waste Systems, Inc. v. Department of Environ J@ mental Quality of Ore., 511 U.S. 93, 105 (1994). The most we can say is that modification of Ohio's tax scheme could subject LDCs to economic pressure that in turn could threaten the preservation of an adequate customer base to support continued provision of bundled services to the captive market. The conclusion counsels against taking the step of treating the bundled gas seller like any other, with the consequent necessity of uniform taxation of all gas sales.  =H3 d d83؃  2  F2  Prudence thus counsels against running the risk of weakening or destroying a regulatory scheme of publicP"   service and protection recognized by Congress despite its noncompetitive, monopolistic character. Still less is that risk justifiable in light of Congress's own power and institutional competence to decide upon and effectuate any desirable changes in the scheme that has evolved. Congress has the capacity to investigate and analyze facts beyond anything the judiciary could match, joined with the authority of the commerce power to run economic risks that the judiciary should confront only when the constitutional or statutory mandate for judicial  Jp choice is clear. See, e.g., Bush v. Lucas, 462 U.S. 367, 389 (1983) (Congress may inform itself through factfinding procedures such as hearings that are not available to the courts). One need not adopt Justice Black's extreme reticence in Commerce Clause jurisprudence to recognize in this instance the soundness of his statement that a challenge like the one before us call[s] for Congressional investigation, consideration, and action. The Constitution gives that branch of government the power to regulate commerce among the states, and until it acts I think we should enter the field with extreme  J caution. Northwest Airlines v. Minnesota, 322 U.S. 292, 302 (1943) (concurrence). This conclusion applies  Jh a fortiori here, because for a halfcentury Congress has  J@ been aware of our conclusion in Panhandle Eastern Pipe  J Line Co. v. Public Serv. Comm'n of Ind., 332 U.S. 507 (1947), that the NGA exempts state regulation of instate retail natural gas sales from the dormant Commerce Clause and in the years following that decision has only reaffirmed the power of the States in this regard.3 Stars 3*** 5:3 Stars Accordingly, we conclude that Ohio's regulatory response to the needs of the local natural gas market have resulted in a noncompetitive bundled gas product that distinguishes its regulated sellers from independent marketers to the point that the enterprises should not>"   be considered similarly situated for purposes of a claim of facial discrimination under the Commerce Clause. GMC's argument that the State discriminates between regulated local gas utilities and unregulated marketers must therefore fail.  ;H2 d d8C؃  t2  GMC also suggests that Ohio's tax regime facially discriminates because the State's sales and use tax exemption would not apply to sales by outofstate LDCs.  J. See, e.g., Reply Brief for Petitioner at 2, n.1. As respondent points out, however, the Ohio courts might well extend the challenged exemption to outofstate utilities if confronted with the question. Indeed, in  J Carnegie Natural Gas Co. v. Tracy, No. 94!K!526 (Ohio Bd. Tax App. Nov. 17, 1995), reported in Ohio Tax Rep. (CCH) at 402!254, the Ohio Board of Tax Appeals accepted the argument of a Pennsylvania public utility that insofar as the outofstate utility sold natural gas to Ohio consumers it qualified as a utility under Ohio Rev. Code Ann. 5727.01 and was therefore exempt from the State's corporate franchise tax. Outofstate public utilities may therefore also qualify for Ohio's sales and use tax exemption. Because we have never deemed a hypothetical possibility of favoritism to constitute discrimination that transgresses constitutional com J mands, Associated Industries of Mo. v. Lohman, 511 U.S., at 654, this argument, too, must be rejected.  9H1 d d8V؃  2  Finally, GMC claims that Ohio's tax regime violates the Equal Protection Clause by treating LDCs' natural gas sales differently from those of producers and marketers. Once again, the hurdle facing GMC is a high one, since state tax classifications require only a rational basis to satisfy the Equal Protection Clause.  J See, e.g., Amerada Hess Corp. v. Director, Div. of  J Taxation, N. J. Dept. of Treasury, 490 U.S., at 80.  "   Indeed, in taxation, even more than in other fields, legislatures possess the greatest freedom in classifica J tion. Madden v. Kentucky, 309 U.S. 83, 88 (1940).  It is true, of course, that in some peculiar circumstances state tax classifications facially discriminating against interstate commerce may violate the Equal Protection Clause even when they pass muster under the  J Commerce Clause. See Metropolitan Life Ins. Co. v.  J Ward, 470 U.S. 869, 874!883 (1985).& uB( ԍ FTN  &  XgEpXFr  ddf < Ward involved an Alabama statute that facially discriminated against interstate commerce by imposing a lower gross premiums tax on instate than outofstate insurance companies. The case did not present a Commerce Clause violation only because Congress, in enacting the McCarranFerguson Act, 15 U.S.C. 1011!1015, intended to authorize States to impose taxes that burden interstate  uBr commerce in the insurance field. Ward, 470 U.S., at 880. We nonetheless invalidated Alabama's classification because neither of the two purposes furthered by the [statute] ... is legitimate under  uB the Equal Protection Clause .... Id., at 883. But as we  J explain in Part IV, supra, Ohio's differential tax treatment of LDC and independent marketer sales does not facially discriminate against interstate commerce. And in any event, there is unquestionably a rational basis for Ohio's distinction between these two kinds of entities.3 Stars 3*** GL3 Stars We conclude that Ohio's differential tax treatment of public utilities and independent marketers violates neither the Commerce Clause nor the Equal Protection Clause and that petitioners' claims are without merit otherwise. The judgment of the Supreme Court of Ohio is affirmed.  J ` BIt is so ordered.ă